Unilever shares posted the biggest drop in the AEX index on Euronext Amsterdam on Tuesday, as Morgan Stanley deemed the recent stock market rally exaggerated.

Following its rebound in recent weeks, the stock is now trading on a PER 2024 of 17.6x, a slight premium to the rest of the consumer staples sector, which is trading at 17.4x earnings, the analyst points out.

An unjustified phenomenon, according to the intermediary, in view of the Anglo-Dutch FMCG group's low earnings-to-cash conversion rate and high exposure to emerging markets.

As a result, Morgan Stanley has lowered its recommendation on the stock from 'in-line weighted' to 'underweight', with a price target reduced from 4,100 to 3,775 pence.

Following these comments, Univeler lost more than 2.1% on Tuesday afternoon, compared with a decline of only 2.1% on the AEX.

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